U.S. judge orders ex-drug executive Shkreli to give up $7.36 million

Brendan Pierson

3 Min Read

NEW YORK (Reuters) - Former drug company executive Martin Shkreli may have to give up a Picasso and a one-of-a-kind Wu-Tang Clan album, after a U.S. judge on Monday ordered him to forfeit $7.36 million following his conviction of defrauding investors.

FILE PHOTO: Former drug company executive Martin Shkreli arrives at U.S. District Court for the third day of jury deliberations in his securities fraud trial in the Brooklyn borough of New York, U.S., August 2, 2017. REUTERS/Amr Alfiky/File Photo

U.S. District Judge Kiyo Matsumoto in Brooklyn said the assets Shkreli could forfeit to satisfy the judgment also include $5 million in a brokerage account and his stake in Vyera Pharmaceuticals, one of the drug companies he founded.

Shkreli is scheduled to be sentenced for securities fraud on Friday.

A lawyer for Shkreli could not immediately be reached for comment on the judge’s order.

Shkreli, 34, has been in jail since September, when Matsumoto revoked his bail after he offered a $5,000 bounty for a strand of Hillary Clinton’s hair in a Facebook post.

Shkreli became notorious as the “Pharma Bro” when he raised the price of anti-parasitic drug Daraprim by over 5,000 percent in 2015 while he was chief executive officer of Turing Pharmaceuticals. Turing is now Vyera.

In December 2015, Shkreli told Bloomberg Businessweek that he had bought the Wu-Tang Clan’s “Once Upon a Time in Shaolin” when the hip-hop group auctioned the sole copy of the album to the highest bidder. Bloomberg reported that he paid $2 million for it.

Shkreli has also boasted of owning a Picasso painting.

A jury found Shkreli guilty last August of securities fraud charges unrelated to Daraprim. They determined that he lied to investors about the performance of two hedge funds he ran, MSMB Capital and MSMB Healthcare. He also was found guilty of conspiring to manipulate the stock price of another drug company he founded, Retrophin Inc (RTRX.O).

Shkreli’s lawyers have asked that he be sentenced to 12 to 18 months in prison. They argued in a court filing that a lenient sentence is warranted partly because the investors eventually came out ahead when Shkreli paid them in stock and cash from Retrophin.

Matsumoto has already ruled that when Shkreli is sentenced, he will be held responsible for $10.4 million in losses, including all of the money his investors entrusted to his hedge funds. She said that regardless of the investors’ ultimate gains, Shkreli got their money in the first place through fraud.

Although the $10.4 million loss will result in a higher recommended sentence under federal guidelines, Matsumoto is not required to follow those guidelines.